When debt feels overwhelming, it’s natural to look for solutions. A quick online search will show you dozens of debt relief options—from debt consultants and credit counsellors to Licensed Insolvency Trustees (LITs). But not all debt advisors are the same, and choosing the right one can make all the difference in getting a real fresh start.
In Canada, only a Licensed Insolvency Trustee is legally authorized to provide certain debt relief solutions, including filing a Consumer Proposal or Bankruptcy under the Bankruptcy and Insolvency Act (BIA). Debt consultants, on the other hand, may offer advice or budgeting help, but they can’t give you access to legally binding solutions.
Let’s break down the key differences so you can make an informed choice.
What Is a Licensed Insolvency Trustee (LIT)?
A Licensed Insolvency Trustee is a federally regulated professional, licensed by the Office of the Superintendent of Bankruptcy (OSB). LITs:
- Have strict training, qualifications, and ethical standards.
- Can stop collection calls, wage garnishments, and lawsuits immediately by filing a proposal or bankruptcy.
- Administer Consumer Proposals and Bankruptcies—the only two government-approved legal options to eliminate or reduce debt in Canada.
- Provide full financial assessments, including credit counselling and budgeting guidance.
In short, an LIT is both a debt advisor and a legal officer of the court who can enforce your rights.
What Is a Debt Consultant?
Debt consultants (sometimes called “debt advisors” or “debt settlement companies”) are typically unregulated. This means:
- They don’t need a license to operate in Canada.
- They cannot file a Consumer Proposal or Bankruptcy on your behalf.
- They often act as a “middleman” between you and a Licensed Insolvency Trustee.
- Some charge high fees upfront without guaranteeing results.
While some debt consultants may provide budgeting tips or refer clients to LITs, they cannot offer you the full range of debt solutions directly.
Key Differences: LIT vs. Debt Consultant
| Feature | Licensed Insolvency Trustee (LIT) | Debt Consultant |
| Regulation | Federally licensed & overseen by OSB | Unregulated |
| Legal Authority | Can file Consumer Proposals & Bankruptcies | Cannot file; may refer you to an LIT |
| Cost | Fees are set by federal law (no hidden charges) | Fees vary; may charge upfront |
| Immediate Protection | Stops collections, garnishments, and lawsuits | Cannot stop legal actions |
| Debt Relief Options | Full range (proposals, bankruptcy, counselling) | Limited; advice only |
Why It Matters
Choosing a debt consultant instead of going directly to an LIT can cost you time, money, and unnecessary stress. Since debt consultants must often refer you to an LIT anyway, you may end up paying extra fees without getting results faster.
By going directly to a Licensed Insolvency Trustee, you:
- Get immediate relief from collection calls and garnishments.
- Access legally binding debt solutions approved by the Canadian government.
- Receive professional guidance with clear, regulated fees.
- Avoid unnecessary “middleman” costs.
Final Thoughts
If you’re struggling with unmanageable debt, it’s important to work with someone who has the authority and expertise to give you real solutions. A Licensed Insolvency Trustee is the only professional in Canada who can provide legal debt relief options while ensuring your rights are protected.
Don’t settle for unregulated advice or costly middlemen. Go straight to the source and take the first step toward a debt-free future.